Tag Archives: Cost-cutting

Bank of America is “too big to fail” and its cost-cutting strategy is in focus

Bank of America is the second-largest bank in the U.S, and the company is expected to post quarterly earnings on Wednesday before market open. Bank of America is expected to earn $0,76 per share and that`s five cents ahead of the Wall Street.

If this number holds it would be a 12,7% change YoY. Their revenue are expected to be $23,04 billion and that is a whopping 1,9% from the same quarter last year.

The bank have benefited huge from a roring U.S economy and most of the profits is coming from its consumer bank, but all major business segments have increased the profits. All this thanks to healthy loan and deposit growth.

Its net interest income growth have also risen thanks to rising interest rates. Like all other banks, Fed`s change in policy is negative for the bank and a cut in interest rate will decrease NII. Lower interest rate will also trigger a recession, but that`s another story. The Fed is extremely dovish and that in turn will make the banks forward return to decline the next months.

Bank of America is the second-largest bank of the four «too big to fail» money center banks, and its P/E is only 10,85 with a dividend yield of 2,04%. The bank has a streak of 12 conssecutive quarters of beating EPS estimates on the line. The focus this time is its cost-cutting strategy.

The chart for the bank showed a golden cross in late March this year, but that has not been a great signal so far. It remain to see the stock to go higher.

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